Nupathe's Failure to Launch Leads to Modest Takeover

Nupathe (PATH) was granted U.S. approval for the migraine armband Zecuity last January but the company was never able to raise the money needed to launch the product commercially.

On Monday, Endo Pharmaceuticals (ENDP) acquired Nupathe at the fire-sale price of $2.85 per share. While that's a modest 24% premium to Nupathe's closing stock price on Friday, it's 25% lower than where Nupathe shares traded soon after Zecuity's approval last January.

The all-cash acquisition will cost Endo $105 million.

Nupathe shareholders will be eligible for extra payments if Endo manages to turn Zecuity into a commercial success. A contingent value right (CVR) worth $2.15 per share will be paid out if Zecuity sales exceed $100 million during any four-quarter period within the first 9 years of commercial sales. The value of the CVR will rise to $3.15 if Zecuity sales exceed $300 million.

Zecuity is a battery-powered armband which delivers a dose of the generic migraine medicine sumatriptan through the skin.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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